The prehistory of cryptocurrencies

Cryptographic money was first mooted by David Chaum in his 1982 paper “Blind Signatures for Untraceable Payments”12 and his 1985 paper “Security without Identification: Transaction Systems to Make Big Brother Obsolete.”13 Chaum founded DigiCash in 1990 to put his ideas into practice. It failed in the market, however, and closed in 1998.

Most concepts later used in Bitcoin originated on the Cypherpunks mailing list in the early 1990s. The ideology was libertarian right-wing anarchism, often explicitly labeled anarcho-capitalism; they considered government interference the gravest possible threat, and hoped to fight it off using the new cryptographic techniques invented in the 1970s and 1980s. They also tied into the Silicon Valley and Bay Area Extropian/transhumanist subculture. Tim May’s “Crypto Anarchist Manifesto,” a popular document on the list, is all about the promise of money and commerce with no government oversight, and anticipates many of the future promises and aspirations of cryptocurrency.14

Chaum’s DigiCash was not acceptable to the Cypherpunks, as a single company confirmed every participant’s signature. They wanted something that didn’t rely on a central authority in any way.

Adam Back proposed Hashcash to the list in 1997, money created by guessing the reversal of a cryptographic hash; Nick Szabo put forward Bitgold and Wei Dai b-money in 1998. These were all bare proposals, without working implementations.

“Cypherpunk” was a pun on “cyberpunk.” Cyberpunk science fiction of the 1980s never got much into pure bank-free cryptographic currencies; it mostly treated the idea of transmitting money digitally at all as being interesting enough for story purposes. (If William Gibson had thought of Bitcoin for his cyber-heist short “Burning Chrome,” it could have been set in the present day.) The Cypherpunks got very excited about Neal Stephenson’s 1999 novel Cryptonomicon, one plot thread of which involves a fictional sultanate promoting a cryptographic digital currency, even though the book example is issued by a government and backed by gold.

An anonymous person calling himself “Satoshi Nakamoto” started working on Bitcoin in 2007,15 as a completely trustless implementation of the b-money and Bitgold proposals16 (though Nakamoto wasn’t aware of Szabo’s work until quite late in the process).17 In 2008, he emailed Adam Back with some of his ideas, and six weeks later announced the Bitcoin white paper on the Cryptography and Cryptography Policy mailing list, a successor to the Cypherpunks list. It was, at last, a proposal with a plausible decentralisation mechanism, soon followed by actual working code that people could try. Nakamoto and list contributor Hal Finney tested the software in November and December 2008, and Bitcoin 0.1 was released in January 2009.

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